WASHINGTON – Jay Allen is a fan of President Donald Trump and voted for him because he believed the Republican would cut taxes and reduce regulations to help his manufacturing business in northeast Arkansas.
However, the tariffs that are a key part of Trump’s economic plan have created significant challenges for his company, Allen Engineering Corp. This company produces industrial equipment used for installing, finishing, and paving concrete. The import taxes have increased the prices of the engines, steel, gearboxes, and clutches that Allen relies on to make power trowels, which can sell for as much as $100,000 each.
Recommended Videos
Allen’s situation highlights a growing concern that the tariffs, which were intended to aid American factories, are actually harming many of them. The situation might worsen as the administration works to implement new tariffs following a Supreme Court ruling that deemed some existing emergency import taxes illegal.
In 2025, Allen ran his company at a loss due to tariffs. His workforce declined from a peak of 205 employees to 140. To cope this year, he raised prices by 8% to 10%, even though he worries this will lead to fewer sales.
“What’s really sad is the unintended consequences of his tariffs are hurting manufacturing in our country,” said Allen. “Unfortunately, the working-class people are getting squeezed.”
Manufacturing jobs have decreased during Trump’s first year back in office. Trump’s main argument for the tariffs was that they would encourage factories to open in the U.S. and help close federal budget deficits. However, these outcomes have not yet occurred.
Factories continue to lose workers, with 98,000 manufacturing jobs disappearing during Trump’s first full year back in the White House. American companies that bear the burden of tariffs are now suing the Trump administration for more than $130 billion in tariff refunds. Meanwhile, the federal deficit is expected to increase over the next decade.
The White House argues that construction spending is robust, more workers are being hired to build factories, new investments are being made, and labor productivity in manufacturing is rising — which might eventually lead to a revival in factories.
“It takes time to get production online, and therefore it will be some more time before we fully materialize the benefits of the president’s policies,” said Pierre Yared, acting chairman of the White House Council of Economic Advisers.
Construction has increased, but much of it is due to Biden’s infrastructure bill. Factory construction spending started to rise in 2022, fueled by expectations of government support from Biden’s CHIPS and Science Act, which included substantial subsidies for semiconductor plants. This legislation significantly contributed to an increase in the annual rate of construction spending on manufacturing facilities, according to Skanda Amarnath, executive director of the economic policy group Employ America.
Despite some positive trends in construction spending on factories, the overall pace has seen a decline during Trump’s presidency, primarily because of ongoing projects initiated under Biden’s administration in states like Arizona, Texas, and Idaho, as noted by Amarnath.
Amarnath reviewed comments from regional Federal Reserve banks, indicating that some companies might expand by taking advantage of Trump’s tax breaks on investments in equipment and new buildings. However, these comments reveal no significant overall increase in manufacturing resulting from Trump’s tariffs.
“You don’t get the sense that there is this new manufacturing renaissance under way,” Amarnath said.
Uncertainty regarding tariffs has discouraged investments. Trump has enacted over 50 tariff-related actions, not counting threats made on social media or comments to reporters that have not come to fruition.
This barrage of announcements, reversals, exemptions, and legal challenges, along with Trump’s choice to impose tariffs without congressional approval, has made it tough for smaller manufacturing companies to strategize.
For instance, Allen Engineering imports its 75-horsepower diesel engines from Germany. Building them in the United States would require a $20 million investment — a significant risk given the uncertainty around tariffs.
“Are engine-makers going to spend that kind of money to move production from Germany to the U.S. when they don’t know what the landscape is going to be in three years?” Allen questioned. “I don’t know who is going to be in the White House, and what the stance is going to be on these tariffs.”
Joseph Steinberg, an economist from the University of Toronto, states that studies indicate it could take a decade for manufacturing employment to exceed pre-tariff levels. However, Steinberg argues that the current landscape is far from the “best case” scenario, as U.S. trade policy remains unsettled, leaving companies hesitant to expand.
Equipment manufacturers have faced significant challenges due to rising steel costs. About 98% of U.S. manufacturing firms have fewer than 200 employees and lack the brand recognition or lobbying power of major corporations like Apple, General Motors, and Ford to mitigate the impact of tariffs.
In February, the Association of Equipment Manufacturers reported that the U.S. has fallen far behind China in global manufacturing. The group has called for tax credits to offset the costs associated with tariffs and specifically requested tariff relief on raw materials and components that cannot be sourced domestically at scale.
Steel tariffs have raised particular concerns. Trump imposed these tariffs last March and increased them to 50% in June. The Supreme Court ruling did not affect these tariffs.
